Capital Structure Determinants in Growth Firms Accessing Venture Funding

This paper focuses on the capital structure determinants of VC-backed firms prior to the VC investment event. The analyses are carried out on a matched sample of Spanish VC-backed firms at the expansion stage and similar firms that did not receive venture funding. In the former, we find that the structure of assets, size and growth opportunities have a positive impact on the debt ratio, whereas profitability has a negative impact. Conversely, we find that only the structure of assets is positively related to the leverage ratio in non-VC-backed firms. Overall, there is stronger evidence on the Pecking Order Theory for VC-backed firms.

Keywords: Capital structure, determinants, growth, venture capital

JEL Classification: G32, G24

Suggested Citation: Suggested Citation

Balboa, Marina and Martí Pellón, José and Tresierra, Alvaro, Capital Structure Determinants in Growth Firms Accessing Venture Funding (February 16, 2009). THE OXFORD HANDBOOK OF VENTURE CAPITAL, Chapter 10, pp. 328-353, Douglas Cumming, ed., Oxford University Press, USA, Available at SSRN: https://ssrn.com/abstract=1344267 or http://dx.doi.org/10.2139/ssrn.1344267

Marina Balboa

University of Alicante - Department of Financial Economics ( email )

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